The volatility of technology stocks has reached historically high levels, with the gap between the Nasdaq Volatility Index (VXN) and the market volatility index (VIX) widening to 12 points – a level not seen in 23 years. Since the start of May, the gap has tripled, as VXN climbed about 9 points (43%) while VIX rose only 2 points (9%).
During the 2008 financial crisis and the 2020 pandemic, the gap peaked at 7 and 11 points respectively. The current trend indicates investors are pricing in significantly more risk and uncertainty for tech stocks relative to the broader market, suggesting that market volatility is likely to persist.